Tenants Decry Rate Shift

CHICAGO — Over the strenuous objections of tenants rights advocates, a Chicago City Council committee voted Friday to change the way renters are paid interest on their security deposits.

Under the measure, the interest rate would be adjusted annually based on what banks pay on passbook savings accounts instead of the current rate imposed by ordinance, a flat 5 percent.

Ald. Bernard Stone (50th), chairman of the Buildings Committee, said the measure will be fine-tuned by the time it goes to the full council next Wednesday, tying security deposit interest to an average of yields on passbook and money-market accounts as well as short-term certificates of deposit.

The blended rate is expected to be somewhat higher than what is paid currently on passbooks by Chicago financial institutions--less than 3 percent.

Tenant advocates who spoke at a committee meeting that lasted more than four hours, fought for retention of the 5 percent rate. They contended that a changing rate would make it difficult for renters to compute how much is due them when they move; that tenant-landlord disputes would mushroom over what is owed; and that landlords would profit unfairly at tenants' expense.